Cause of Action Accrual

Cause of action accrual in a claim for economic loss? There has been some discussion as to whether the cause of action accrues at the time the agreement is entered into, or at the time that the loss is sustained.

Mr Cornwell worked for the Commonwealth and relied on advice he was given by his superior officer in July 1965 about Superannuation.

Mr Cornwell suffered an economic loss as a result of that advice, and it was held that the Commonwealth was liable.

The defence said that the action was statute barred as the agreement entered into was in 1965.

The defence was dismissed because the Judge said the cause of action had not accrued until the retirement of the respondent on 31 December 1994; before that date any loss suffered by the respondent had been contingent rather than actual.

Accrual of Cause of Action

[I]n a case involving a loan of monies, damage will be sustained and the action will accrue only when recovery can be said, with some certainty, to be impossible.

And then again, quoting Wardley above, the Court said;

There are good reasons for a principled analysis of actual damage. One reason is that it would be unjust to compel a plaintiff to commence proceedings before the existence of his or her loss is ascertainable.

The aforementioned High Court decisions have been followed locally in the Queensland Supreme Court and Queensland Court of Appeal.

[a] lender in a transaction secured by mortgage does not suffer loss until recovery of the loan can be said “with some certainty” to be impossible, either from the borrower or the security property or guarantors. That was also the position Kenny & Good Pty Ltd & Anor v MGICA. The line of cases in the High Court since Wardley has followed a consistent direction on these points

Accrual of Cause of Action in Queensland

In any current matter, an assessment would need to be explored on the facts, whether a loan can be said “with some certainty” to be unrecoverable from the borrower, the property, the guarantors or any other interested party. If not, the loss is said to accrue from that point.

In Hawkins v Clayton … the court rejected the proposition that, at least in the case of claims in negligence for economic loss, time does not run until the plaintiff discovers, or could on reasonable inquiry have discovered, that damage has been sustained

It is worth noting that the Court in Dustar found in favour of the defendants because, even when applying the High Court precedent, the Plaintiff was still statute barred.

In Hawkins v Clayton Deane J reiterated the proposition that an action in economic loss is complete when the damage caused by the breach of duty is sustained, and went on to reject a submission that that proposition should be qualified, in the case of a claim for damages for economic loss, by a proposition that time does not commence to run for the purposes of a statutory limitation period, until the plaintiff discovers, or could on reasonable inquiry have discovered, that the damage had been sustained. In that view he enjoyed the express support of Mason CJ and Wilson J.

Accrual of an Action in Qld Matters

In Sullavan & Anor v. Teare [2010] QCA 70, the defendant/respondent was a solicitor who had acted for the appellants with respect to their purchase of real property, and did so negligently. The Court followed the High Court rulings when they said;

[T]o show the existence of a completely constituted cause of action in negligence, a plaintiff must be able to show duty, breach, and damage caused by the breach; accordingly, in the ordinary case, it is at the time when that damage is sustained that the action ‘first accrues’ for the purposes of a provision under the Limitation Act.

The accrual date in a cause of action will be the date from when the loss actually crystallised, being the date that all options were exhausted. If all pathways to recovery were exhausted upon the transfer of property to the bona fide third party, then the loss accrued from then.